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Thursday, March 28
The Indiana Daily Student

Coats proposes notification of tax status to nonprofits

Sens. Dan Coats, R-Indiana, and Ben Cardin, D-Maryland, introduced legislation Friday requiring the Internal Revenue Service to notify nonprofit organizations before their tax-exempt statuses are automatically revoked.

The NOTICE Act (S.400) also allows the IRS to reinstate tax-exempt status if the nonprofit did not receive the notice and subsequently files an information return, according to a release from Sen. ?Coats’ office.

Under current federal law, charities and other nonprofits automatically lose tax-exempt status if they do not file annual information returns for three consecutive years.

The IRS automatically revoked the tax-exempt status of more than 12,000 charities and other nonprofits in Indiana since 2011.

Fewer than a thousand of them successfully navigated the IRS process of reinstating their status, according to the release.

Nationwide, nearly 584,000 charities and other nonprofits lost their status because of the automatic revocation. To date, the IRS has processed and reinstated the tax-exempt status of less than 51,000 of these nonprofits, according to the release.

“As the federal ?government is forced to reduce spending, community and faith-based organizations are increasingly filling the void,” Coats said in the release. “We need to make sure we allow these organizations to grow without interference from Uncle Sam.”

Some nonprofits never realize their status until it is too late, Coats added.

“Because the IRS does not adequately notify charities as this deadline approaches, many nonprofits discover the problem only after their names appear on a list of organizations that have already lost their status — after it is too late to act,” he said. “Some ?never realize it at all.”

National organizations supporting the bill include the Alliance for Charitable Reform and the National Volunteer Fire Council.

Indiana organizations supporting the legislation include the Indiana Philanthropy Alliance, Indiana CPA Society and Indiana Society of Enrolled Agents.

From 1981 to 1999, Coats served the U.S. Congress. He stepped down in 1999, but returned to the U.S. Senate in January 2011 to focus on cutting wasteful spending and reducing the national debt, according to his website. Coats serves on the finance, joint economic and select ?intelligence committees.

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